Citibank is being sued for not acting on red flags tied to a $20 million crypto romance scam.
The scam involved 43 transfers with 12 going through Citibank without proper fraud checks.
Romance crypto scams caused over $5 billion in losses last year and the number keeps rising.
Citibank is now facing a lawsuit after a customer lost $20 million in a crypto romance scam. Filed in Manhattan federal court, the suit accuses Citibank of negligence and failure to act on suspicious activity. The complaint was submitted on Tuesday.
https://twitter.com/MetaEraHK/status/1938120697621934386
The plaintiff, Michael Zidell, claims he lost the funds to a scam that involved emotional manipulation and fake crypto investments. The scheme, known as a “pig butchering” scam, often starts with building trust through online relationships. Fraudsters then persuade victims to invest in fake crypto platforms.
Relationship Started on Facebook
According to court filings, Zidell was contacted by a woman named Carolyn Parker in early 2023. She claimed to be a businesswoman and built a relationship with him. Over time, she encouraged him to invest in non-fungible tokens (NFTs). She directed him to use a specific trading platform.
Zidell eventually made 43 separate wire transfers over several months. These totaled more than $20 million and involved several banks. Of that amount, 12 transfers worth $4 million passed through Citibank. The funds were sent to an entity named Guju Inc.
Red Flags Allegedly Ignored by Citibank
Zidell argues that Citibank failed to flag these transactions despite clear warning signs. According to the lawsuit, Guju Inc. received multiple large transfers in round numbers. The transfers came from unrelated individuals and trusts. Such activity often requires enhanced due diligence under anti-money laundering regulations.
The suit claims Citibank did not investigate or report the irregular transactions. Zidell says this allowed the fraud to continue. He accuses the bank of aiding the scammers by ignoring compliance requirements.
Romance Crypto Scams on the Rise
Scams that use romance as a tool to steal crypto assets are increasing. Data from Cyvers shows that victims lost over $5.5 billion last year in over 200,000 incidents. Chainalysis reported total crypto scam losses at $9.9 billion in 2024. This figure is expected to grow.
Earlier this month, U.S. authorities announced a large crypto seizure linked to similar frauds. The U.S. Secret Service recovered $225 million in stolen Tether (USDT). Coinbase analysts helped track the crypto movements. Tether had previously frozen 39 wallets tied to the fraud.
Investigators linked the funds to criminal operations in Southeast Asia. These scams often involve trafficked individuals forced to take part. U.S. agencies are working with crypto firms to track and recover stolen assets.
